Rodney purchased a call option on Wildbear Industries stock with a $100 exercise price, for $2 per share, when the actual price of the stock is $97. If the price goes up to $103, what is his rate of return on investment?

Question

Quizplus · Accepted Answer

The rate of return on investment is calculated as (selling price - purchase price) / purchase price. In this case, the purchase price is $2 per share and the selling price is $103 - $100 = $3 per share. Therefore, the rate of return on investment is ($3 - $2) / $2 = 50%.

Rodney Purchased a Call Option on Wildbear Industries Stock with a $100